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AT&T CORP. v. USPS

September 29, 1998

AT&T CORPORATION, Plaintiff,
v.
U.S. POSTAL SERVICE, Defendant.



The opinion of the court was delivered by: GOTTSCHALL

MEMORANDUM OPINION AND ORDER

 AT&T has brought this action against the United States Postal Service, claiming that the Postal Service violated provisions of the Postal Service Procurement Manual by entering into certain contracts for the management of pay telephones at various Postal Service facilities. The Postal Service has moved for summary judgment, *fn1" arguing that (1) a Postal Service Management Instruction, and not the Procurement Manual, contains the applicable guidelines for obtaining pay phones and management services; and (2) the procedure used by the Postal Service in awarding the contracts complied with the Management Instruction. For the reasons set forth below, the motion for summary judgment is denied.

 Regulations governing the Postal Service come from several sources. According to 39 C.F.R. § 211.2:

 The regulations of the Postal Service consist of:

 
* * *
 
(2) The . . . Postal Contracting Manual [superseded by the Procurement Manual, see 39 C.F.R. § 601.102] . . . [and]
 
(3) . . . Management Instructions . . . .

 Thus both the Procurement Manual and Management Instructions provide regulations for the Postal Service.

 AT&T claims that when the Postal Service entered into contracts with one of AT&T's competitors to manage pay phones at various Postal Service facilities, the Postal Service violated a provision of the Procurement Manual that requires competitive purchasing. Section 1.7.2.a of the Procurement Manual specifies that "purchases must be made on the basis of adequate competition whenever feasible" and that "adequate competition means the solicitation and participation of a sufficient number of capable sources to ensure that the required quality and quantity of goods and services is obtained when needed, and that the price is fair and reasonable."

 Although in general the Procurement Manual "applies to all purchasing activities," Procurement Manual § 1.1.1.b., the Postal Service argues that the competitive purchasing requirements in the Procurement Manual were not applicable here. The Postal Service notes that it may depart from the requirements in the Procurement Manual when there are "procedures or instructions developed to (1) meet specific operational needs or the needs of specialized commodity areas and (2) approved by the vice president of Purchasing and Materials." Procurement Manual § 1.4.1.c.2.

 On May 31, 1995, the Postal Service promulgated Management Instruction No. AS-840-95-6, entitled "Acquiring Pay Telephones." The Postal Service argues that this Management Instruction created procedures for purchasing pay phones and pay phone services. Among other things, the Management Instruction contains "Acquisition Guidelines" and "Acquisition Procedures" for pay phones and services. The Postal Service contends that this Management Instruction identifies the procedures the Postal Service must use in acquiring pay telephones and pay telephone services and that the procedures - in particular the requirements for competitive purchasing - in the Procurement Manual do not apply.

 AT&T argues that the Management Instruction applies only to the acquisition of pay telephones. The contracts here are for services for existing pay phones: management services and primary interexchange carrier (PIC) services for 0 calls. AT&T claims that the Management Instruction does not cover contracts for these types of services. AT&T cites to a bid protest decision by the Postal Service's Office of General Counsel. Protest of U.S. Sprint Communications Company, P.S. Protest No. 91-27, July 15, 1991. In the U.S. Sprint decision, the Postal Service contracting officer had argued that Section 362.6 of the Postal Service's Administrative Support Manual (ASM) supplanted the competition requirements of the Procurement Manual. *fn2" The General Counsel rejected this argument, finding that Section 362.6 covered only the buying or leasing of pay telephones themselves and did not apply to acquisition of PIC services. Subsequent to the U.S. Sprint decision, the ASM was revised and Section 362.6 was deleted.

 With little discussion, AT&T argues that the Management Instruction "Acquiring Pay Telephones" is "materially the same as the provisions of the prior Section 362.6 of the ASM." (AT&T Resp. at 3.) The Postal Service argues that there are important differences between Section 362.6 and the Management Instruction.

 Section 362.6 is concerned with the procedures for obtaining pay telephones, whether by lease or purchase. For example, Section 362.62 sets out various items that a postal facility must include in a request to the field division for pay telephones "prior to any postal facility entering into an agreement to lease or purchase pay telephones." Section 362.63 is called ...


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